The US dollar broke down significantly against the Japanese yen during the week, especially during the flash crash that sliced all the way down to the ¥105 level. This would have been algorithmic trading during a very thin time of day, as Tim Cook suggested that Apple was struggling with the Chinese economy slowing down. This happened after 5 PM EST, which is one of the thinnest times of day. However, this would have created a lot of destruction from a technical standpoint, so I do think that we may get a little bit of a bounce here, but quite frankly I would be very interested near the ¥110 level in shorting this market at the first signs of weakness.
USD/JPY Video 07.01.19
Ultimately, this is a market that has made a significant break down as of late, and I think we will revisit the ¥105 level underneath as it is the bottom of the longer-term consolidation. I don’t know at this point this is going to be easy to deal with, because there are a lot of mixed signals when it comes from the Federal Reserve. Because of this, I think that this pair will continue to be extraordinarily volatile, and although the US dollar has been strengthening against the European currencies, I don’t expect it to do so against the Japanese yen in the uncertain economic environment that we find ourselves in globally, not only due to trade wars, but simple slowdowns.
